Prolonged recovery in Europe weighs on US solar stocks

Sunpower

17/07/2024 14:09

** Bank of America sees elevated channel inventory in Europe
for inverters continuing to pressure sell-through volumes, while
North America has seen a slight uptick excluding California and
Texas
    ** Sees favorable regulatory policies from AD/CVD to ITD
domestic adders supporting higher averages selling prices,
expects minimal backlogs in Q2 given uncertainty on poly-silicon
policy
    ** For trackers, order trend remains robust; stay
constrictive on Array Technologies  ARRY.O  and Nextracker
 NXT.O , while 45X tax credits support margin expansion 
    ** SolarEdge  SEDG.O  ("neutral") PT raised to $31 from $29
    ** Additionally, brokerage Mizuho cuts PT by ~40% on SEDG to
$50 from $84, remains "outperform"
    ** Mizuho reduces growth earnings, valuation multiples, and
pricing in potential inventory write-down; see revenue recovery
taking longer, even after destocking is over, due to strained
relationships between SEDG and distributor customers in
Netherlands
    ** Solar firms such as Canadian Solar  CSIQ.O , First Solar
 FSLR.O , Enphase Energy  ENPH.O  and SunPower Corp  SPWR.O 
fall between 7.9% and 1.3%
    ** Invesco solar ETF  TAN.P  falls 2.2%
    
    BofA changes PTs of the following: 
 Company                  New PT      Old PT      Rating
 Enphase Energy  ENPH.O   $70         $71         Underperform
 First Solar  FSLR.O      $320        $331        Buy
 Nextracker  NXT.O        $66         $64         Buy
 SolarEdge  SEDG.O        $31         $29         Neutral
 

 (Reporting by Seher Dareen in Bengaluru)
 ((Seher.Dareen@thomsonreuters.com;))